Mind the Revenue Gap

Will a new hotel tax plug our infrastructure holes?
illustration by Tony Healey
Jennifer Gibson Schecter was once a tourist in New Orleans herself and is now proud to call NOLA home. She also writes the Wednesday Tourism Blog on BizNewOrleans.com

 

Believe it or not, there are people who question why anyone would ever want to live in New Orleans. For the most part, those people can keep living where they are, and I’ll take shorter lines at Haydel’s, thankyouverymuch.

It gets sticky, however, when those people question even visiting New Orleans. We are a region that relies on hospitality and tourism, so when we have to explain potholes and boil water advisories to visitors it can be challenging to make the case to ever return or speak well of us to their friends back home. Creole cottages are charming. Brushing your teeth with bottled water is not.

For many of the organizations who work to draw visitors to New Orleans, our infrastructure challenges have been top of mind. That is why New Orleans and Company, joined by Greater New Orleans Inc., announced a new proposed hotel tax this past December.

The 0.55 percent sales tax would be charged on hotel rooms in New Orleans, effectively returning the tax rate to the level it was before 2018, when state legislators allowed the temporary tax to expire. According to Stephen Perry, president and CEO of New Orleans and Company, the tax would create $6.7 million in annually recurring dollars that would be bonded out into $81.8 million for capital expenditures.

When the plan was announced, Perry outlined priority spending, identifying $5 million to $10 million to create a master plan to guide the infrastructure projects, $25 million to build a pipeline beneath the Mississippi River to connect Sewerage and Water Board water treatment plants on each riverbank, and $25 million to $27 million to create a downtown transit hub.

The inclusion of a master plan surprised me because I thought there must already be infrastructure priorities researched and identified by the mayor’s office, but according to Perry, that is not the case.

“We’ve had a laundry list of infrastructure priorities we’ve heard over the years from the city and Sewerage and Water Board,” said Perry. “What we have yet to see, and what I think is absolutely critical from the mayor’s office, is a comprehensive plan that integrates priorities, engineering strategies and methodologies, execution metrics, time tables and critical path plan illustrations so that we understand. It comes down to this, when you are asking for potentially hundreds of millions of dollars, you have an obligation to show the public, every resident of every neighborhood and every member of the business community exactly how you are going to spend the money, what the projects are and how all of those integrate into a holistic strategy that becomes roads, drainage and drinking water.”

Mayor LaToya Cantrell responded to the new tax announcement by issuing a press release and calling the proposed hotel sales tax “inadequate” for the city’s infrastructure needs. The mayor argued that too many of the city’s tourism taxes go to support organizations like New Orleans and Company and the Superdome, and should instead be funneled more directly to the city from the state. Perry disagrees.

“It’s easy for all of us to say we need lots of dollars for infrastructure. We all agree on that,” said Perry. “To go forward, what we need to know is what we do to fix that and in what order and how do all those pieces tie together — the same way a business does when it does a capital expansion plan…When the mayor called our proposed tax inadequate, we understood what she was trying to say. It’s not enough money to fix everything that needs to be fixed over the next 20 years. That’s true. But she doesn’t need the money for everything that needs to be fixed today.”

New Orleans needs critical infrastructure repairs and new projects conceived and completed. While city, policy and hospitality leaders aren’t exactly in agreement on the how, they are in agreement on the need.

“All of us in our industry — I, our company and all of our members — we want to be phenomenal supporters of this administration and applaud [Mayor Cantrell] for her passion in wanting to repair longstanding infrastructure needs. We stand with her 100 percent,” said Perry. “But our job is to make sure in crafting the right public policy initiatives to do so, we don’t impair the highest performing private sector in the city, nor do we diminish the organic growth of the city, or affect the jobs of the 50,000 residents in the city who work in the industry and 40,000 from surrounding parishes that work in New Orleans tourism.”


 

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